New workers are starting behind and can't get ahead

By Adam Belz Minneapolis Star Tribune

Posted:
03/28/2014 07:19:38 PM PDT

Gabe Ciuraru doesn't see many good options for people his age.

At 23, he's waited tables, driven tanks for the Israeli army, taken community college classes and taught Hebrew in St. Paul, Minn. Lately he's been selling cosmetics from a kiosk at the Mall of America.

In the fall he plans to pursue a degree in sports management at the University of Minnesota. But he'll have to take on a lot of debt, and he's not optimistic it will lead to a good-paying job.

"I have friends that still live at home because they're paying off their student loans," Ciuraru said. "You're chained to your desk. And if you're not, the debt gets bigger."

People who finished high school or college in the past few years came into the job market at the wrong time. The economic downturn slashed pay for young workers and left more of them jobless, even after many went deep into debt to pay for college.

Economists believe they may never recover what they lost in wages and experience.

"If we look over people's likely future lives, when you're part of a generation that comes in with a tough job market and your wages are not so great, you don't recover," said Richard Freeman, a Harvard University labor economist. "They are going to be at a permanently lower standard of living than they would have been had we either avoided this catastrophe or had we had a successful jobs recovery."

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Demand for college-educated workers probably peaked around 2000, and the decline since then has affected all young workers, Canadian economists Paul Beaudry and Benjamin Sand say.

As the number of college diplomas in the job market keeps rising, high-skilled workers are forced to take lesser jobs, "pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force altogether," Beaudry and Sand wrote in 2013.

The phenomenon was partly hidden by the housing bubble in the 2000s, but then laid bare by its bursting.

"This has been a terrible decade," said Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University. "There's only been three years where employers have aggressively hired in the last 12 years."

Morgan Moore, 28, realized in 2008, less than a year into law school at the University of Illinois, that he probably wouldn't end up working as a lawyer.

He had hoped to work as legal counsel for a corporation, but the prospect grew distant as the economy sank into recession.

"That amount of time grew from five to 10 years, to longer than that, to maybe impossible," Moore said. "So rather than wait and see, I decided to pursue other opportunities."

He finished law school so he wouldn't regret quitting, but when he graduated in 2011 he didn't have the money for bar exam prep classes. He couldn't find any work near Chicago, let alone at a law firm. So he spent the summer in his fiancee's mother's basement, collecting food stamps.

Ultimately he moved back to Minnesota's Twin Cities, where he grew up, in search of any kind of work. He did part-time stints on the sales floor at Sears, at a Byerly's grocery store and parking cars for a valet service.

In February 2012, he started selling cars full time. He doesn't regret his expensive law degree, but it will take a long time to pay down his $80,000 in student debt. He has no plans to buy a house, and he had to sign up for health insurance through Minnesota's "Obamacare" plan.

"Those of us who were negatively affected by the economy are faced with the consequences of a lost three or four years," Moore said. "That's definitely left an impact."

Since 2008, first-time job seekers have faced a market more difficult than anything their older siblings or parents have seen.

Unemployment for people under 25 hit 21 percent in 2010 and still is well above its prerecession high at 15.6 percent, according to the Bureau of Labor Statistics. The situation is worse for workers under 25 with no college education, whose unemployment rate is 18.6 percent.

Young people who are working have fewer opportunities for advancement, in part because fewer older workers are voluntarily quitting their jobs.

"The longer this goes on, and the longer they're not attached to something meaningful -- and there's a lot of young people who still aren't -- then they're wasting their human resource investment, which is their education," said Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University.

Repeated studies show that people who look for their first job during a recession take as much as a 9 percent wage cut. These losses can be permanent, and even when they're not, may fade only after a decade.

For now, many college students appear to have accepted that it won't be easy to get a good job.

"If you go down to people 22 or 23 years old now, they don't feel quite as disillusioned," said Richard Freeman, the economist. "They understood. The signal was coming out from society. It's amazing, to me at least, how easily people adjust to whatever the current situation is."